The Revenue calculates that, in the past two years alone, about 10 million people have collectively overpaid pounds 800m tax on deposit accounts. But only 2 million people have contacted the Revenue in response to the recent Taxback campaign to claim refunds.
Tax adviser Walter Sinclair, author of the J Rothschild Assurance Tax Guide 1993-94, believes individuals and couples lose 'countless thousands' by neglecting their tax. Personal tax allowances for non-working wives often go unused when their husbands are paying 40 per cent tax on the couple's investment income. If the investments are transferred to the wife the couple will get lower rates and a second allowance.
Employees also have room for manoeuvre to increase their income or to reduce their own tax liabilities. Accountants Pannell Kerr Forster has advised several large companies on how to pay out bonuses in the form of gold bullion, on which they pay no National Insurance.
The difficulty with many tax- saving procedures is that they go against human instincts. The elderly may be frightened of giving away their property in order to cut down on their posthumous inheritance tax bill. And if they do give away their assets they may prefer to give them to their children rather than their grandchildren. But Loughlin Hickey of KPMG Peat Marwick says: 'It is much more tax-efficient to leave it to the grandchildren.'
Allied Dunbar Tax Handbook 1993-94, J Rothschild Assurance Tax Guide 1993-94.Reuse content